On February 27, the California Department of Financial Protection and Innovation (DFPI) issued new guidance with respect to the performance of remote work by mortgage loan originators (MLOs) working for licensees under the California Residential Mortgage Lending Act (California Financial Code Sections 50000 et seq., the “CRMLA”). The CRMLA does not expressly prohibit employees of a licensee from working at a remote location, such as an employee’s home. A licensee may authorize an employee to perform limited functions at a remote location that is not considered a branch office, provided that the location does not have the indicia of a branch office and is not advertised to the public as a business location. However, the guidance noted that a branch manager must continue to supervise employees who are working remotely, and that the DFPI will continue to examine the supervisory activities of a branch manager to ensure that the branch manager is adequately supervising each MLO and employee regardless of whether they are working at a remote location or a branch office.
The guidance lists ten considerations for a licensee when determining whether a location is adequately supervised, or whether it has the indicia of a branch office.
Putting It Into Practice: The language of the DFPI’s guidance is consistent with the model proposed by the Mortgage Bankers Association, and other states that have acted to permit remote work. There are now 24 states that have enacted legislation, promulgated rules, or issued regulatory guidance that permanently allows MLOs to work from a remote location (see our previous blog post on remote work authorization here).
It is also worth noting that MLOs who work for companies licensed under the California Financing Law are permitted to work remotely under California Assembly Bill 2001, which was enacted and became effective in August 2022, and amended Sections 22154 and 22155 of the California Financial Code, and added a new Section 22157.1.